Case Study Questions
1. Why have OpenTable competitors had a difficult time competing against Open Table?
OpenTable is well established, has their very popular website OpenTable.com which is a popular web site for making restaurant reservations. OpenTable operate TopTable.com , which is a leading restaurant website in the United Kingdom. OpenTable now has around two-thirds of the nation’s reservation-taking restaurants as clients. OpenTable is also relatively easy for people seeking a reservation to make one with their easy to use web site, mobile web site and mobile app
2. What characteristics of the restaurant market make it difficult for a reservation system to work?
It is difficult to make a reservation system work based on several characteristics of the restaurant market. First, the restaurant industry, as the case study mentions, was slow to leverage the power of the Internet. Most restaurant websites are not advanced enough to be able to take reservations for a particular day and time.
3. How did OpenTable change its marketing strategy to succeed?
OpenTable’s strategy included paying online restaurant reviewers for links to the OpenTable web site and targeting national chains for fast expansion. They retool its software and hardware to create a user friendly ERB system. OpenTable also created a user-friendly Electronic Reservation Book (ERB) and they deploy a door-to-door sales force to attract subscription from high-end restaurants, this combination of e-commerce, useful and friendly technology really worked for them
4. Why would restaurants find the SaaS model very attractive?
The Saas model can add efficiency and cost savings for the both the vendor and customer. Customers save time and money since they do not have to install and maintain programs.
1. Why were so many entrepreneurs drawn to start businesses in the online retail sector initially?
First, because the Internet greatly reduced search and transaction costs, consumers would use the Web to find the lowest-cost products. Second, it was assumed that the entry costs to the online retail market were much less than those needed to establish physical storefronts, and that online merchants were inherently more efficient at marketing and order fulfillment than offline stores. Third, as prices fell, traditional offline physical stores would be forced out of business. Last, in some industries the market would be disintermediated as manufacturers or their distributors entered to build a direct relationship with the consumer.
5. Name two assumptions e-commerce analysts made early on about consumers and their buying behavior that turned out to be false.
The largest single segment of U.S. retail sales is durable goods. In the early days of e-commerce, sales of small-ticket non-durable goods vastly outnumbered those of large-ticket items. But the recent growth of big ticket, durable goods has changed the overall sales mix. In addition, retailers of durable goods use the Web as an information tool, and this also translates into sales. It is probably not accurate to say at this time that any one sector dominates online retailing.
10. Which is a better measure of a firm’s financial health: revenues, gross margin, or net margin? Why?
The best measure of a firm's financial health is net margin, which sums up in one number how successful a company has been at making a profit on each dollar of sales. A negative net margin means that a company is losing money on each sale.
15. What is the most common use of real estate Web sites? What do most consumers do when they go to them?
Real estate differs from other types of online financial services because it is impossible to complete a property transaction online. Clearly, the major impact of internet real estate sites is in influencing offline decisions.
1. Find an example not mentioned in the text of each of the four types of online retailing business models. Prepare a short report describing each firm and why it is an example of the particular business model.